The South Korean government has begun recovering insurance premiums and imposing fines on employers involved in so-called "fake 3.3" disguised employment practices.
On July 1, the Ministry of Employment and Labor announced it is taking follow-up actions based on the results of its March report on the supervision of fake 3.3 disguised employment.
From December 1 of last year to March 5 of this year, the ministry conducted a focused inspection that uncovered 1,070 workers who were paying business income tax instead of income tax and were not enrolled in the four major insurances. A total of 72 workplaces were identified, and the ministry has notified the Korea Workers' Compensation and Welfare Service to take action for their enrollment in the four major insurances.
The service will retroactively enroll all uncovered workers in employment and industrial accident insurance and has assessed an additional charge of 520 million won for unpaid past premiums. Local employment and labor offices plan to sequentially impose fines on workplaces that failed to report or delayed reporting insured status.
The term "fake 3.3" refers to a method where employers classify workers as freelancers or sole proprietors, withholding 3.3% in business income tax. When workers conceal their employment relationship while working under the direction and supervision of an employer at set times and locations, they can be excluded from protections such as the four major insurances, severance pay, and various labor laws.
The impact of disguised employment extends beyond tax and insurance issues. Workers who become unemployed or injured do not receive social insurance protection, while employers can evade responsibility by reducing labor costs. This raises fairness concerns compared to businesses that comply with the four major insurance requirements.
Fines will also be imposed. For failure to report or delayed reporting of insured status, a fine of 30,000 won will be levied per insured individual, while false reporting will incur a fine of 50,000 won per individual. The ministry is committed to enforcing premium recovery and fines on identified workplaces to hold them accountable for disguised employment practices.
In the second half of the year, the ministry plans to continue its focused inspections of suspected fake 3.3 disguised employment workplaces. It will utilize data from the National Tax Service, anonymous tips, and job advertisement monitoring to identify suspicious businesses. The ministry will persist in recovering premiums and imposing fines on identified workplaces while also working to uncover missing enrollees and improve awareness.
Minister of Employment and Labor Kim Young-hoon stated, "Fake 3.3 disguised employment is not only a tax evasion issue but also an act that deprives workers of their right to protection from risks such as unemployment and industrial accidents. We will rigorously supervise fake 3.3 practices through close cooperation among ministries and conduct education and outreach through meetings with key local organizations."
* This article has been translated by AI.
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